The industrial real estate sector has proven to be one of the most resilient segments within the commercial property market, navigating economic turbulence and shifts in consumer behavior with remarkable adaptability.

The past five years have been marked by unprecedented challenges — from a global pandemic to supply chain disruptions and inflationary pressures. Yet, the industrial sector has emerged as a standout performer. The surge in e-commerce, accelerated by pandemic-era consumer behavior shifts, has driven heightened demand for warehouses, distribution centers, and last-mile facilities — the latter referring to properties situated near urban centers. This demand has been a key engine of growth, pushing vacancy rates to historically low levels and fueling strong rent increases.

Over this period, industrial properties have benefited from a structural transformation in how goods are delivered to consumers. This is not a temporary trend but a fundamental evolution, positioning industrial real estate as an essential infrastructure asset.

Since 2020, industrial vacancy rates have hovered around 5% — a notable contrast to other commercial real estate categories such as office and retail, which have faced elevated vacancy levels due to remote work trends and retail closures. Rent growth has also been impressive, with annual increases averaging 7–10% in major markets, driven by limited supply and sustained demand.
Absorption rates — the pace at which available space is leased — have remained positive, even amid increased construction activity aimed at meeting rising demand.

A Cautiously Optimistic Five-Year Forecast

Looking ahead, Marcus & Millichap projects a cautiously optimistic outlook for the next five years. The industrial sector appears well-positioned to maintain its upward trajectory, supported by several favorable drivers. Chief among them is the continued expansion of e-commerce, which shows no signs of slowing. Projections suggest that online sales could account for 30% of total retail sales by 2030, up from around 22% in 2025. This growth will continue to fuel demand for logistics facilities, particularly in secondary and tertiary markets where land is more accessible and development opportunities remain abundant.

Technology is also reshaping the sector. Automation, robotics, and artificial intelligence are transforming warehouse operations, increasing demand for modern facilities with high ceilings and advanced infrastructure. Investors are increasingly prioritizing properties capable of accommodating these innovations, indicating a shift toward quality over quantity in new developments.

Challenges and Market Dynamics

However, some headwinds remain. Elevated interest rates — while beginning to stabilize in early 2025 — may still temper investment activity if borrowing costs stay high. Additionally, geopolitical tensions and potential changes in trade policy could disrupt global supply chains, impacting the flow of goods and, by extension, industrial demand in certain geographies.

Markets such as Dallas–Fort Worth and Atlanta remain powerhouses due to their strategic locations and robust transportation networks, despite recent surges in deliveries and a slight uptick in vacancy. Meanwhile, emerging markets like Charlotte, Nashville, and Central Ohio are gaining momentum as businesses seek cost-effective alternatives to coastal hubs. These secondary markets offer lower barriers to entry for investors and ample room for expansion.

The Sustainability Imperative

Sustainability is becoming a cornerstone of new developments. Solar panels, energy-efficient lighting, and water recycling systems are increasingly standard features. Experts predict that by 2030, sustainability will be a key differentiator, influencing tenant preferences and property valuations alike.

The industrial real estate sector’s ability to weather uncertainty over the past five years underscores its enduring appeal. The intersection of e-commerce growth, technological innovation, and strategic development has solidified the sector’s standing as a top-tier asset class.

Sources

CommercialEdge. (2025). National Industrial Report (February 2025). Available at: https://www.commercialedge.com/blog/national-industrial-report/

Cushman & Wakefield. (2025). US Industrial MarketBeat Q1 2025. Available at: https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/us-industrial-marketbeat

Statista. (2025). E-commerce share of retail sales worldwide. Available at: https://www.statista.com/statistics/534123/e-commerce-share-of-retail-sales-worldwide/